NY Fed suspends MF Global, deal on future nears
http://jlne.ws/siDoQL
Greece Gambles On Referendum For New Debt Deal
Associated Press
Taking a huge political gamble, Greece's prime minister announced Monday that his debt-strapped country will hold a referendum on the new European debt deal reached last week, the first such vote in 37 years.
http://jlne.ws/smhglb
Fed plans to buy $45 billion Treasuries and sell $43 billion Treasuries in November
http://jlne.ws/hp922J
CFTC and SEC Approve Confidential Private Fund Risk Reporting
http://jlne.ws/vniqvG
CFTC Release: CFTC Designates Eris Exchange, LLC as a Contract Market
Press Release
The Commodity Futures Trading Commission (CFTC) on Friday, October 28, 2011, approved the application of Eris Exchange, LLC (“Eris”) for designation as a contract market. Eris is organized as a Delaware limited liability company and is a wholly-owned subsidiary of Eris Exchange Holdings, LLC (“Eris Holdings”). DRW Trading Group is a majority shareholder of the exchange.
http://jlne.ws/tBoAMF
MF Global : 99 Problems And Auditor PwC Warned About None
Forbes
Pre-market trading in MF Global Holdings has been halted since about 6 a.m. ET as news is expected to be released about Jon Corzine’s ailing brokerage. The Wall Street Journal reported Sunday night that MF Global is working on a deal to push its holding company into bankruptcy protection as soon as Monday, and to sell its assets to Interactive Brokers Group in a court-supervised auction.
http://jlne.ws/vHfl9c
Midwest business barometer eases in October
Reuters
The pace of business activity in the U.S. Midwest slowed modestly in October as new orders eased, though the employment gauge rose to its highest level in six months, a report showed on Monday.
http://jlne.ws/rNLSwH
MF Global listed total debt of $39.7 billion and assets of $41 billion in Chapter 11 papers filed http://jlne.ws/w0VstF
Spain Bankers Point to ‘Fudges’ After Regulator Tells Them to Add Capital
http://jlne.ws/vpkP9d
Texas Manufacturing Outlook Survey, October 2011 - Economic Data - FRB Dallas
http://jlne.ws/tRjPlD
Broker-dealer MF Global faces bankruptcy
http://jlne.ws/vBcfyu
ERIS EXCHANGE RECEIVES CFTC APPROVAL TO BECOME DCM, ANNOUNCES BENCHMARK FORWARD STARTING INTEREST RATE SWAP FUTURES
http://jlne.ws/ue5VVj
Senin, 31 Oktober 2011
ISDA Statement on CDS Credit Event Process
NEW YORK, Monday, October 31, 2011 – The International Swaps and Derivatives Association, Inc. (ISDA) today issued the following statement in order to ensure an accurate understanding of how credit events are determined for credit default swaps contracts. Today’s statement is intended to underscore key points articulated in the Greek Sovereign Debt Q&A, updated on October 31, which discussed this issue with regards to the Eurozone proposal for Greek debt. Some media accounts of the information contained in the Q&A inaccurately described the credit event process.
The determination of whether a credit event occurs under CDS documentation is made by the relevant ISDA Determinations Committee (DC), which consists of 10 sell-side and five buy-side firms. ISDA serves as secretary to, but does not sit on, the DC. A super majority of votes (12 of 15 DC members) is required to find that a credit event has occurred without the decision being subject to external legal review. A weaker majority decision would be subject to external legal review that might overturn such a determination.
The DC’s review of a potential credit event comes after a proposal has been announced and its final terms are publicly available and only if a market participant requests the DC to take up the matter. Neither of these has yet occurred with regards to the Greek sovereign debt situation. No debt issued by the Hellenic Republic has been modified to date, nor have the formal terms for any such modification under the Eurozone proposal yet been released. No market participant has yet made such a request to the DC.
When the DC does review a situation to determine whether a credit event has occurred, it does so using publicly available information and according to the terms of the ISDA Credit Derivatives Definitions. The Definitions specify that for a credit event to occur, a restructuring must be binding on all holders of a particular bond or loan.
Based on what we know now, it appears from news reports that the Eurozone proposal involves a voluntary exchange that would not be binding on all holders. As such, it does not appear to be likely that the Eurozone proposal will trigger payments under existing CDS contracts. However, whether or not it does so will be decided by the DC on the basis of the specific facts, if a request is made to them.
More information on the credit event process and the ISDA Determinations Committee is available in the Greek Sovereign Debt Q&A at on the ISDA website and on the Determinations Committee section of ISDA’s website at http://www2.isda.org/determinations-committees/.
For More Information, Please Contact:
Lauren Dobbs, ISDA New York, +1 212 901 6019, ldobbs@isda.org
Rose Millburn, ISDA London, +44 203 088 3526, rmillburn@isda.org
Donna Chan, ISDA Hong Kong, +852 2200 5906, dchan@isda.org
The determination of whether a credit event occurs under CDS documentation is made by the relevant ISDA Determinations Committee (DC), which consists of 10 sell-side and five buy-side firms. ISDA serves as secretary to, but does not sit on, the DC. A super majority of votes (12 of 15 DC members) is required to find that a credit event has occurred without the decision being subject to external legal review. A weaker majority decision would be subject to external legal review that might overturn such a determination.
The DC’s review of a potential credit event comes after a proposal has been announced and its final terms are publicly available and only if a market participant requests the DC to take up the matter. Neither of these has yet occurred with regards to the Greek sovereign debt situation. No debt issued by the Hellenic Republic has been modified to date, nor have the formal terms for any such modification under the Eurozone proposal yet been released. No market participant has yet made such a request to the DC.
When the DC does review a situation to determine whether a credit event has occurred, it does so using publicly available information and according to the terms of the ISDA Credit Derivatives Definitions. The Definitions specify that for a credit event to occur, a restructuring must be binding on all holders of a particular bond or loan.
Based on what we know now, it appears from news reports that the Eurozone proposal involves a voluntary exchange that would not be binding on all holders. As such, it does not appear to be likely that the Eurozone proposal will trigger payments under existing CDS contracts. However, whether or not it does so will be decided by the DC on the basis of the specific facts, if a request is made to them.
More information on the credit event process and the ISDA Determinations Committee is available in the Greek Sovereign Debt Q&A at on the ISDA website and on the Determinations Committee section of ISDA’s website at http://www2.isda.org/determinations-committees/.
For More Information, Please Contact:
Lauren Dobbs, ISDA New York, +1 212 901 6019, ldobbs@isda.org
Rose Millburn, ISDA London, +44 203 088 3526, rmillburn@isda.org
Donna Chan, ISDA Hong Kong, +852 2200 5906, dchan@isda.org
Jumat, 28 Oktober 2011
Top Interest Rate Headlines 10-28-2011: Eurozone Bond Yields Show No Sign of Having Been Cured
Eurozone Bond Yields Show No Sign of Having Been Cured
By Mark Gongloff, WSJ.com
The eurozone Plan to Save the World has made US stock charts look like somebody lit a fuse under them, but on charts of eurozone sovereign bond yields, the Plan has left no evidence of its existence.
http://jlne.ws/tNy9yC
TeraExchange to Launch Central Limit Order Book for Swaps and OTC Cleared Derivatives
Press Release
SUMMIT, N.J. and WASHINGTON, Oct. 28, 2011 /PRNewswire/ -- New OTC derivatives trading venture TeraExchange (www.TeraExchange.com) is preparing to launch one of the world's first central limit order books for OTC cleared derivatives in Q4 2011. The initiative positions TeraExchange to seize "first mover" advantage as sweeping regulatory reform reshapes the world of trading and clearing OTC derivatives.
http://jlne.ws/vBtjV9
Mortgage probe may open new path for housing relief
By Aruna Viswanatha and Rick Rothacker, Reuters
A controversial weapon could be deployed soon in the U.S. fight against the housing crisis as states and top banks near a deal in their dispute over mortgage abuses -- cutting the mortgage debt owed by homeowners.
http://jlne.ws/uiFOMp
NY Fed: ECB Dollar Borrowing From Fed Stable at $1.853 Billion
By Michael S. Derby
The European Central Bank remained the only borrower at the Federal Reserve’s dollar swap borrowing facility, the New York Fed said Thursday.
http://jlne.ws/ti4vxG
Squeeze on lending in China has prompted some businesses short of cash to stop paying wages to blue-collar workers
The Economist
EFFORTS to curb inflation in China are having some painful side-effects. A squeeze on bank lending has prompted some businesses short of cash to stop paying wages to blue-collar workers. Even the much-vaunted state sector is feeling the pinch. Work has all but ground to a halt on thousands of kilometres of railway track, and many of the network’s 6m construction workers have been complaining about not being paid for weeks or sometimes months.
http://jlne.ws/tAP1vN
Relieved US banks sell $5bn of debt in a week
FT.com
http://jlne.ws/rxBBiq
Stats on the widening income gap between the rich and poor in the U.S.
The city of Atlanta had the highest income inequality rate in the country from 2005 to 2009, just ahead of New Orleans, Washington, D.C., and Miami, according to a U.S. Census Bureau report.
http://jlne.ws/uyuCWj
Chart: Personal saving rate declines to 3.6 percent from 4.1 percent
http://bit.ly/rDFz5l
Erste Bank Slashes CDS 94%, Looks To Exit Remainder In Days
Global Finance
Austria's Erste Group Bank AG (EBS.VI, EBKDY) said Friday it had cut the net volume of credit-default swap insurance it has sold by 94% over the last month as the Austrian bank scrambles to reduce its exposure to peripheral euro-zone sovereign debt.
http://jlne.ws/vPsp8S
Calling Bankers’ Bluff, Merkel Won Europe a Debt Plan
By STEVEN ERLANGER and STEPHEN CASTLE, the New York Times
In the end, it was Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France against the European banking establishment — and the bankers blinked.
http://jlne.ws/to341f
Euro zone rates on hold as guard changes
By Sakari Suoninen, Reuters
Euro zone interest rates will very likely remain on hold next week as the European Central Bank navigates the transition to new leadership, with an anti-crisis plan forged by EU leaders taking some heat off monetary policymakers.
http://jlne.ws/tbR2RU
What Does 'Recapitalizing Banks' Actually Mean?
By UWE E. REINHARDT, The New York Times
In a recent lead editorial, “Will Mrs. Merkel Wake Up This Time?” The New York Times lectured Chancellor Angela Merkel of Germany on her and her citizens’ duties toward nations that have lived for years beyond their means and now need financial aid, and toward European banks that through their lax and myopic loan policies aided and abetted the living beyond means.
http://jlne.ws/vhNKEj
Consumer spending up in September on savings
By Lucia Mutikan, Reuters
Sluggish income growth led U.S. households to cut back on saving in September to raise their spending, showing the economy's recovery remains fragile.
http://jlne.ws/tDbXoI
Growth of Japanese banks in the FX market
Celent
The Japanese banks have grown their global FX volumes market share tremendously in the last year by winning western money management clients and hedge funds as well as the Japanese FX volumes which were generally routed through their Western counterparts.
http://jlne.ws/towILx
Dodd Frank’s long-distance paper chase
By Gillian Tett, Financial Times
A couple of days ago, a senior banker in New York showed me a memo that he had just received from his lawyers about the so-called Volcker rule for proprietary trading. This stretched to 82 pages on an iPad, replete with dense charts. And that was merely his summary document; the “full” explanation ran to several hundred more pages. “It’s mad!” he sighed, explaining that this was only one of several memos he had recently received on Dodd-Frank and Basel rules.
http://jlne.ws/ufoha7
What Does ‘Recapitalizing Banks’ Actually Mean?
By UWE E. REINHARDT, NY Times
In a recent lead editorial, “Will Mrs. Merkel Wake Up This Time?” The New York Times lectured Chancellor Angela Merkel of Germany on her and her citizens’ duties toward nations that have lived for years beyond their means and now need financial aid, and toward European banks that through their lax and myopic loan policies aided and abetted the living beyond means.
http://jlne.ws/vOhu09
Shadow banking surpasses pre-crisis level
FT Finance News (ext) via Yahoo! Finance
The shadow banking system, the host of lightly regulated entities that compete with banks to provide credit, is bigger than it was before the financial crisis, despite growing efforts by regulators to ...
http://jlne.ws/taSS10
Fed Willing to Gamble on Short-Run Trade-Off: Caroline Baum
Bloomberg
Economists may not see eye to eye on much, but over the years I've found a few core concepts on which all but the most politically motivated would agree.
http://jlne.ws/uxhswB
Inside Deutsche Bank Debate on U.S. Sliding Into Japan Malaise
Bloomberg
Deutsche Bank AG’s Ajay Kapur says the U.S. is sliding into an economic malaise similar to Japan’s so-called lost-decade of the 1990s. The Hong Kong-based strategist draws the parallel using similarities in demographics and financial-market performance.
http://jlne.ws/rAI5Bk
Nordic Banks 'Punished' as EBA Tests Penalize Mortgage Assets
BusinessWeek
Nordic banks are being penalized by European rules that assign tougher risk weights to mortgage assets than local regulators, forcing lenders to scrap payouts for shareholders to fulfill capital rules.
http://jlne.ws/vsxMNP
Banco Popular profits fall ahead of merger
By Victor Mallet in Madrid, Financial Times
Banco Popular, the Spanish bank that is buying the smaller Banco Pastor in the latest move to consolidate the country’s financial sector, said its net profit in the first nine months of the year had fallen to E404m, in line with analysts’ forecasts and down 23 per cent from the same period last year.
http://jlne.ws/unIe7L
Citigroup hires Hubble from ICE Clear Europe
FT Finance News (ext) via Yahoo! Finance
Citigroup (NYSE:C) has poached Suzanne Hubble, a senior executive from ICE Clear Europe, as it attempts to become a big beneficiary of the deep reforms reshaping US and European markets.
http://jlne.ws/sibN0Z
EU banking package to restore conficence in the capital markets
Press Release
The Austrian Financial Market Authority (FMA) and the Oesterreichische Nationalbank (OeNB) welcome yesterday's adoption by the European Council and the Euro Summit of the Heads of State or Government of a comprehensive set of measures aimed at restoring confidence in the financial markets.
http://jlne.ws/vC768E
By Mark Gongloff, WSJ.com
The eurozone Plan to Save the World has made US stock charts look like somebody lit a fuse under them, but on charts of eurozone sovereign bond yields, the Plan has left no evidence of its existence.
http://jlne.ws/tNy9yC
TeraExchange to Launch Central Limit Order Book for Swaps and OTC Cleared Derivatives
Press Release
SUMMIT, N.J. and WASHINGTON, Oct. 28, 2011 /PRNewswire/ -- New OTC derivatives trading venture TeraExchange (www.TeraExchange.com) is preparing to launch one of the world's first central limit order books for OTC cleared derivatives in Q4 2011. The initiative positions TeraExchange to seize "first mover" advantage as sweeping regulatory reform reshapes the world of trading and clearing OTC derivatives.
http://jlne.ws/vBtjV9
Mortgage probe may open new path for housing relief
By Aruna Viswanatha and Rick Rothacker, Reuters
A controversial weapon could be deployed soon in the U.S. fight against the housing crisis as states and top banks near a deal in their dispute over mortgage abuses -- cutting the mortgage debt owed by homeowners.
http://jlne.ws/uiFOMp
NY Fed: ECB Dollar Borrowing From Fed Stable at $1.853 Billion
By Michael S. Derby
The European Central Bank remained the only borrower at the Federal Reserve’s dollar swap borrowing facility, the New York Fed said Thursday.
http://jlne.ws/ti4vxG
Squeeze on lending in China has prompted some businesses short of cash to stop paying wages to blue-collar workers
The Economist
EFFORTS to curb inflation in China are having some painful side-effects. A squeeze on bank lending has prompted some businesses short of cash to stop paying wages to blue-collar workers. Even the much-vaunted state sector is feeling the pinch. Work has all but ground to a halt on thousands of kilometres of railway track, and many of the network’s 6m construction workers have been complaining about not being paid for weeks or sometimes months.
http://jlne.ws/tAP1vN
Relieved US banks sell $5bn of debt in a week
FT.com
http://jlne.ws/rxBBiq
Stats on the widening income gap between the rich and poor in the U.S.
The city of Atlanta had the highest income inequality rate in the country from 2005 to 2009, just ahead of New Orleans, Washington, D.C., and Miami, according to a U.S. Census Bureau report.
http://jlne.ws/uyuCWj
Chart: Personal saving rate declines to 3.6 percent from 4.1 percent
http://bit.ly/rDFz5l
Erste Bank Slashes CDS 94%, Looks To Exit Remainder In Days
Global Finance
Austria's Erste Group Bank AG (EBS.VI, EBKDY) said Friday it had cut the net volume of credit-default swap insurance it has sold by 94% over the last month as the Austrian bank scrambles to reduce its exposure to peripheral euro-zone sovereign debt.
http://jlne.ws/vPsp8S
Calling Bankers’ Bluff, Merkel Won Europe a Debt Plan
By STEVEN ERLANGER and STEPHEN CASTLE, the New York Times
In the end, it was Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France against the European banking establishment — and the bankers blinked.
http://jlne.ws/to341f
Euro zone rates on hold as guard changes
By Sakari Suoninen, Reuters
Euro zone interest rates will very likely remain on hold next week as the European Central Bank navigates the transition to new leadership, with an anti-crisis plan forged by EU leaders taking some heat off monetary policymakers.
http://jlne.ws/tbR2RU
What Does 'Recapitalizing Banks' Actually Mean?
By UWE E. REINHARDT, The New York Times
In a recent lead editorial, “Will Mrs. Merkel Wake Up This Time?” The New York Times lectured Chancellor Angela Merkel of Germany on her and her citizens’ duties toward nations that have lived for years beyond their means and now need financial aid, and toward European banks that through their lax and myopic loan policies aided and abetted the living beyond means.
http://jlne.ws/vhNKEj
Consumer spending up in September on savings
By Lucia Mutikan, Reuters
Sluggish income growth led U.S. households to cut back on saving in September to raise their spending, showing the economy's recovery remains fragile.
http://jlne.ws/tDbXoI
Growth of Japanese banks in the FX market
Celent
The Japanese banks have grown their global FX volumes market share tremendously in the last year by winning western money management clients and hedge funds as well as the Japanese FX volumes which were generally routed through their Western counterparts.
http://jlne.ws/towILx
Dodd Frank’s long-distance paper chase
By Gillian Tett, Financial Times
A couple of days ago, a senior banker in New York showed me a memo that he had just received from his lawyers about the so-called Volcker rule for proprietary trading. This stretched to 82 pages on an iPad, replete with dense charts. And that was merely his summary document; the “full” explanation ran to several hundred more pages. “It’s mad!” he sighed, explaining that this was only one of several memos he had recently received on Dodd-Frank and Basel rules.
http://jlne.ws/ufoha7
What Does ‘Recapitalizing Banks’ Actually Mean?
By UWE E. REINHARDT, NY Times
In a recent lead editorial, “Will Mrs. Merkel Wake Up This Time?” The New York Times lectured Chancellor Angela Merkel of Germany on her and her citizens’ duties toward nations that have lived for years beyond their means and now need financial aid, and toward European banks that through their lax and myopic loan policies aided and abetted the living beyond means.
http://jlne.ws/vOhu09
Shadow banking surpasses pre-crisis level
FT Finance News (ext) via Yahoo! Finance
The shadow banking system, the host of lightly regulated entities that compete with banks to provide credit, is bigger than it was before the financial crisis, despite growing efforts by regulators to ...
http://jlne.ws/taSS10
Fed Willing to Gamble on Short-Run Trade-Off: Caroline Baum
Bloomberg
Economists may not see eye to eye on much, but over the years I've found a few core concepts on which all but the most politically motivated would agree.
http://jlne.ws/uxhswB
Inside Deutsche Bank Debate on U.S. Sliding Into Japan Malaise
Bloomberg
Deutsche Bank AG’s Ajay Kapur says the U.S. is sliding into an economic malaise similar to Japan’s so-called lost-decade of the 1990s. The Hong Kong-based strategist draws the parallel using similarities in demographics and financial-market performance.
http://jlne.ws/rAI5Bk
Nordic Banks 'Punished' as EBA Tests Penalize Mortgage Assets
BusinessWeek
Nordic banks are being penalized by European rules that assign tougher risk weights to mortgage assets than local regulators, forcing lenders to scrap payouts for shareholders to fulfill capital rules.
http://jlne.ws/vsxMNP
Banco Popular profits fall ahead of merger
By Victor Mallet in Madrid, Financial Times
Banco Popular, the Spanish bank that is buying the smaller Banco Pastor in the latest move to consolidate the country’s financial sector, said its net profit in the first nine months of the year had fallen to E404m, in line with analysts’ forecasts and down 23 per cent from the same period last year.
http://jlne.ws/unIe7L
Citigroup hires Hubble from ICE Clear Europe
FT Finance News (ext) via Yahoo! Finance
Citigroup (NYSE:C) has poached Suzanne Hubble, a senior executive from ICE Clear Europe, as it attempts to become a big beneficiary of the deep reforms reshaping US and European markets.
http://jlne.ws/sibN0Z
EU banking package to restore conficence in the capital markets
Press Release
The Austrian Financial Market Authority (FMA) and the Oesterreichische Nationalbank (OeNB) welcome yesterday's adoption by the European Council and the Euro Summit of the Heads of State or Government of a comprehensive set of measures aimed at restoring confidence in the financial markets.
http://jlne.ws/vC768E
Rabu, 26 Oktober 2011
Top Interest Rate Headlines 10-26-2011: German Lawmakers Approve Broadened EFSF
German Lawmakers Approve Broadened EFSF
BY WILLIAM BOSTON, BEATE PREUSCHOFF AND ULRIKE DAUER, WSJ.com
As a blockbuster deal to resolve the spreading euro-zone debt crisis eluded European leaders on Wednesday, German Chancellor Angela Merkel and the swooning euro currency got a boost when German lawmakers backed a resolution approving leveraging models for the euro zone's bailout fund.
http://jlne.ws/u1iIs6
Sarkozy Said to Plan Plea for China Investment to EU Rescue Fund
By Jonathan Stearns and Helene Fouquet, Bloomberg
French President Nicolas Sarkozy plans to call Chinese leader Hu Jintao tomorrow to discuss China contributing to a fund European leaders may set up to bolster its debt-crisis fight, said a person familiar with the matter.
http://jlne.ws/vtROJ6
SEC Commissioner Elisse B. Walter: Remarks before the SIFMA Compliance and Legal Fall Seminar
Good Morning. Thank you, Lauri, for that kind introduction and for inviting me here today. It is very nice to see so many familiar faces. I am reminded of the many earlier occasions when I attended C&L seminars while at FINRA. It is a great pleasure to be back here with you in my current role at the SEC, and to be able to engage in a dialog about the Commission’s work during this very busy time.
http://jlne.ws/s0ZBkn
French Job Picture Dims
BY GABRIELE PARUSSINI, WSJ.com
The number of people actively seeking work in France rose in September to its highest level for 11 years, the labor ministry said Wednesday, adding to evidence that the euro zone's second-largest economy is being hard hit by the global slowdown.
http://jlne.ws/ss7FoV
EU bids to slash Greek debt by third
FT.com
http://jlne.ws/s54D2I
EU leaders seek deal on debt crisis
BBC
EU leaders are holding an emergency summit in Brussels aimed at tackling the eurozone debt crisis. But with disagreement on how to expand the EU's bailout fund for debt-ridden countries, there is growing doubt a comprehensive deal will be reached.
http://jlne.ws/vkDd7M
Bove: Goldman May Get ‘Windfall’ If It Buys MF
By Laura Marcinek, Bloomberg
Goldman Sachs Group Inc. is among firms that could gain by buying part or all of MF Global Holdings Ltd., said Richard Bove, an analyst at Rochdale Securities LLC.
http://jlne.ws/tPoNKt
Don’t expect Mario Draghi to save the euro
By Matthew Lynn, MarketWatch
First things first. Can everyone agree — and headline writers in particular — that once Bank of Italy Gov. Mario Draghi takes over as the new president of the European Central Bank next month, there aren’t going to be any references to Super Mario. Or to fixing the plumbing.
http://jlne.ws/uAIrzu
ECB opens credit window, 181 banks take 1-year loans aimed at boosting wobbly banking system
Washington Post/Bloomberg
The European Central Bank has loaned €56.9 billion ($65.3 billion) to 181 banks for a year as part of its efforts to steady the banking system against the turmoil of the eurozone debt crisis.
http://jlne.ws/tpdzCg
Incoming ECB President Draghi Sees ‘Significant’ Economic Risks
FT.com
http://jlne.ws/sSmGOb
New home sales rise in September, prices fall
Reuters
New single-family home sales rose at their fastest pace in five months in September, a government report showed on Wednesday, but sustained price declines indicated the housing market is far from recovery.
http://jlne.ws/s7s1qD
EFSF's Regling to visit China for talks with investors
Reuters
The head of the euro zone's financial assistance fund, Klaus Regling, will travel to China on Friday for talks with buyers of bonds issued by the European Financial Stability Facility, a spokesman for the fund said.
http://jlne.ws/uxutth
BY WILLIAM BOSTON, BEATE PREUSCHOFF AND ULRIKE DAUER, WSJ.com
As a blockbuster deal to resolve the spreading euro-zone debt crisis eluded European leaders on Wednesday, German Chancellor Angela Merkel and the swooning euro currency got a boost when German lawmakers backed a resolution approving leveraging models for the euro zone's bailout fund.
http://jlne.ws/u1iIs6
Sarkozy Said to Plan Plea for China Investment to EU Rescue Fund
By Jonathan Stearns and Helene Fouquet, Bloomberg
French President Nicolas Sarkozy plans to call Chinese leader Hu Jintao tomorrow to discuss China contributing to a fund European leaders may set up to bolster its debt-crisis fight, said a person familiar with the matter.
http://jlne.ws/vtROJ6
SEC Commissioner Elisse B. Walter: Remarks before the SIFMA Compliance and Legal Fall Seminar
Good Morning. Thank you, Lauri, for that kind introduction and for inviting me here today. It is very nice to see so many familiar faces. I am reminded of the many earlier occasions when I attended C&L seminars while at FINRA. It is a great pleasure to be back here with you in my current role at the SEC, and to be able to engage in a dialog about the Commission’s work during this very busy time.
http://jlne.ws/s0ZBkn
French Job Picture Dims
BY GABRIELE PARUSSINI, WSJ.com
The number of people actively seeking work in France rose in September to its highest level for 11 years, the labor ministry said Wednesday, adding to evidence that the euro zone's second-largest economy is being hard hit by the global slowdown.
http://jlne.ws/ss7FoV
EU bids to slash Greek debt by third
FT.com
http://jlne.ws/s54D2I
EU leaders seek deal on debt crisis
BBC
EU leaders are holding an emergency summit in Brussels aimed at tackling the eurozone debt crisis. But with disagreement on how to expand the EU's bailout fund for debt-ridden countries, there is growing doubt a comprehensive deal will be reached.
http://jlne.ws/vkDd7M
Bove: Goldman May Get ‘Windfall’ If It Buys MF
By Laura Marcinek, Bloomberg
Goldman Sachs Group Inc. is among firms that could gain by buying part or all of MF Global Holdings Ltd., said Richard Bove, an analyst at Rochdale Securities LLC.
http://jlne.ws/tPoNKt
Don’t expect Mario Draghi to save the euro
By Matthew Lynn, MarketWatch
First things first. Can everyone agree — and headline writers in particular — that once Bank of Italy Gov. Mario Draghi takes over as the new president of the European Central Bank next month, there aren’t going to be any references to Super Mario. Or to fixing the plumbing.
http://jlne.ws/uAIrzu
ECB opens credit window, 181 banks take 1-year loans aimed at boosting wobbly banking system
Washington Post/Bloomberg
The European Central Bank has loaned €56.9 billion ($65.3 billion) to 181 banks for a year as part of its efforts to steady the banking system against the turmoil of the eurozone debt crisis.
http://jlne.ws/tpdzCg
Incoming ECB President Draghi Sees ‘Significant’ Economic Risks
FT.com
http://jlne.ws/sSmGOb
New home sales rise in September, prices fall
Reuters
New single-family home sales rose at their fastest pace in five months in September, a government report showed on Wednesday, but sustained price declines indicated the housing market is far from recovery.
http://jlne.ws/s7s1qD
EFSF's Regling to visit China for talks with investors
Reuters
The head of the euro zone's financial assistance fund, Klaus Regling, will travel to China on Friday for talks with buyers of bonds issued by the European Financial Stability Facility, a spokesman for the fund said.
http://jlne.ws/uxutth
Selasa, 25 Oktober 2011
Top Interest Rate Headlines 10-25-2011: Euro Zone Summit Likely To Give Few Numbers On Crisis Response
Euro zone summit likely to give few numbers on crisis response
By Jan Strupczewski, Reuters
Euro zone leaders are unlikely to provide many hard numbers to flesh out their debt crisis response at a summit on Wednesday because the size of banks' losses on Greek bonds is still under negotiation and the bigger firepower of the bailout fund is tough to quantify, euro zone officials said.
http://jlne.ws/uzxxGs
NY Fed's $40 Billion Iraqi Money Trail
By Eamon Javers, CNBC
It has been called the largest airborne transfer of currency in the history of the world. But finding out what happened to all the money involved has become one of the biggest financial mysteries of all time.
http://jlne.ws/sALR0Q
US consumer spending: Hard times
The Economist
AMERICANS are spending less on clothes and eating out and more on household fuel bills and healthcare, according to data from the Bureau of Labour Statistics. Between 2007 and 2010, average annual consumer spending per unit—defined as a family/shared household or single/financially independent person—fell by 3.1% to $48,109.
http://jlne.ws/tC8ry3
Visa, MasterCard Looking Into Online Targeted Advertising Using Credit-Card Data
BY EMILY STEEL, WSJ.com
The two largest credit-card networks, Visa Inc. and MasterCard Inc., are pushing into a new business: using what they know about people's credit-card purchases for targeting them with ads online.
http://jlne.ws/s7YkBa
Chinese Banks’ Profits Surging 22% May Fail to Boost Valuations
By Stephanie Tong and Nathaniel Espino, Bloomberg Businessweek
China’s four biggest banks, forecast this week to report higher third-quarter earnings than the four largest U.S. lenders, may be stuck with valuations near record lows amid investor concern that bad loans will rise.
http://jlne.ws/sCJXgK
Annual Rates of Change Continue to Improve According to the S&P/Case-Shiller Home Price Indices
Data through August 2011
Released today by S&P Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed increases of +0.2% for the 10- and 20-City Composites in August versus July.
http://jlne.ws/uL7Yi2
Richmond Fed manufacturing index fell for fourth consecutive month in Oct
http://jlne.ws/tUxRNn
Consumer Confidence Falls to Two-Year Low
http://jlne.ws/utDc0K
No Joke: Times Getting Tough for U.S. Bankers
BY FRANCESCO GUERRERA, WSJ
At a charity dinner in New York last week, private-equity titan Stephen Schwarzman couldn't resist drawing a parallel between Brian Moynihan, Bank of America Corp.'s chief executive, and his brother, Patrick Moynihan, a deacon and missionary. "Patrick runs a Catholic boarding school in Haiti," the head of Blackstone Group L.P. told a Waldorf Astoria ballroom packed with the likes of Mayor Michael Bloomberg, New York Gov. Andrew Cuomo and assorted Wall Street powerbrokers. "Their parents must be so proud to see two of their boys each running an underfunded, nonprofit, organization."
http://jlne.ws/ubWS5W
MF Global’s Quarterly Loss Widens on Tax, Restructuring Charges
By Matthew Leising, Bloomberg Businessweek
MF Global Holdings Ltd., the futures broker that had its credit rating cut yesterday to the lowest investment grade, said its quarterly loss widened on charges tied to deferred tax assets and a restructuring.
http://jlne.ws/vC8hpH
Hard line adopted on Greek debt loss
By Peter Spiegel in Brussels, Gerrit Wiesmann in Berlin and Hugh Carnegy in Paris, Financial Times
European negotiators have asked Greek debt holders to accept a 60 per cent cut in the face value of their bonds, a hardline stance that far exceeds losses agreed in a deal between private investors and eurozone authorities three months ago.
http://jlne.ws/tr7V7Q
Danish Banking Crisis Entices Buyers Seeking Cheap Targets
BusinessWeek
Denmark's banking crisis has left in its wake a number of cheap acquisition targets that may entice buyers to take advantage of an industry brought to its knees by a sequence of insolvencies.
http://jlne.ws/tralfs
In Cautious Times, Banks Flooded With Cash
By ERIC DASH and NELSON D. SCHWARTZ, NY Times
Droves of consumers and businesses unnerved by the lurching markets have been taking their money out of risky investments and socking it away in bank accounts, where it does little to stimulate the economy.
http://jlne.ws/rXilFH
Saudi Exchange, Muni Board Aids IRS, 401(k) Rules: Compliance
Bloomberg
Saudi Arabia's Capital Market Authority is in discussions with international banks to open the country's stock exchange to foreign investors early next year, three bankers familiar with the matter said.
http://jlne.ws/tW2yWJ
Wall Street Protesters Turn Focus on City Halls
Bloomberg
Advocates for the poor are using the Occupy Wall Street protests in city halls to push municipalities to divest from banks blamed by demonstrators for the global financial crisis and persistent unemployment in its wake.
http://jlne.ws/vDyF8I
World chefs: Vietnamese street meets high finance
Reuters via Yahoo! News
Making and selling Vietnamese street food may seem a world away from dealing in World Bank debt, but Anh Vu does both, and says that working a stall in East London markets sharpens the skills needed to thrive in investment banking.
http://jlne.ws/uXtOhP
By Jan Strupczewski, Reuters
Euro zone leaders are unlikely to provide many hard numbers to flesh out their debt crisis response at a summit on Wednesday because the size of banks' losses on Greek bonds is still under negotiation and the bigger firepower of the bailout fund is tough to quantify, euro zone officials said.
http://jlne.ws/uzxxGs
NY Fed's $40 Billion Iraqi Money Trail
By Eamon Javers, CNBC
It has been called the largest airborne transfer of currency in the history of the world. But finding out what happened to all the money involved has become one of the biggest financial mysteries of all time.
http://jlne.ws/sALR0Q
US consumer spending: Hard times
The Economist
AMERICANS are spending less on clothes and eating out and more on household fuel bills and healthcare, according to data from the Bureau of Labour Statistics. Between 2007 and 2010, average annual consumer spending per unit—defined as a family/shared household or single/financially independent person—fell by 3.1% to $48,109.
http://jlne.ws/tC8ry3
Visa, MasterCard Looking Into Online Targeted Advertising Using Credit-Card Data
BY EMILY STEEL, WSJ.com
The two largest credit-card networks, Visa Inc. and MasterCard Inc., are pushing into a new business: using what they know about people's credit-card purchases for targeting them with ads online.
http://jlne.ws/s7YkBa
Chinese Banks’ Profits Surging 22% May Fail to Boost Valuations
By Stephanie Tong and Nathaniel Espino, Bloomberg Businessweek
China’s four biggest banks, forecast this week to report higher third-quarter earnings than the four largest U.S. lenders, may be stuck with valuations near record lows amid investor concern that bad loans will rise.
http://jlne.ws/sCJXgK
Annual Rates of Change Continue to Improve According to the S&P/Case-Shiller Home Price Indices
Data through August 2011
Released today by S&P Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed increases of +0.2% for the 10- and 20-City Composites in August versus July.
http://jlne.ws/uL7Yi2
Richmond Fed manufacturing index fell for fourth consecutive month in Oct
http://jlne.ws/tUxRNn
Consumer Confidence Falls to Two-Year Low
http://jlne.ws/utDc0K
No Joke: Times Getting Tough for U.S. Bankers
BY FRANCESCO GUERRERA, WSJ
At a charity dinner in New York last week, private-equity titan Stephen Schwarzman couldn't resist drawing a parallel between Brian Moynihan, Bank of America Corp.'s chief executive, and his brother, Patrick Moynihan, a deacon and missionary. "Patrick runs a Catholic boarding school in Haiti," the head of Blackstone Group L.P. told a Waldorf Astoria ballroom packed with the likes of Mayor Michael Bloomberg, New York Gov. Andrew Cuomo and assorted Wall Street powerbrokers. "Their parents must be so proud to see two of their boys each running an underfunded, nonprofit, organization."
http://jlne.ws/ubWS5W
MF Global’s Quarterly Loss Widens on Tax, Restructuring Charges
By Matthew Leising, Bloomberg Businessweek
MF Global Holdings Ltd., the futures broker that had its credit rating cut yesterday to the lowest investment grade, said its quarterly loss widened on charges tied to deferred tax assets and a restructuring.
http://jlne.ws/vC8hpH
Hard line adopted on Greek debt loss
By Peter Spiegel in Brussels, Gerrit Wiesmann in Berlin and Hugh Carnegy in Paris, Financial Times
European negotiators have asked Greek debt holders to accept a 60 per cent cut in the face value of their bonds, a hardline stance that far exceeds losses agreed in a deal between private investors and eurozone authorities three months ago.
http://jlne.ws/tr7V7Q
Danish Banking Crisis Entices Buyers Seeking Cheap Targets
BusinessWeek
Denmark's banking crisis has left in its wake a number of cheap acquisition targets that may entice buyers to take advantage of an industry brought to its knees by a sequence of insolvencies.
http://jlne.ws/tralfs
In Cautious Times, Banks Flooded With Cash
By ERIC DASH and NELSON D. SCHWARTZ, NY Times
Droves of consumers and businesses unnerved by the lurching markets have been taking their money out of risky investments and socking it away in bank accounts, where it does little to stimulate the economy.
http://jlne.ws/rXilFH
Saudi Exchange, Muni Board Aids IRS, 401(k) Rules: Compliance
Bloomberg
Saudi Arabia's Capital Market Authority is in discussions with international banks to open the country's stock exchange to foreign investors early next year, three bankers familiar with the matter said.
http://jlne.ws/tW2yWJ
Wall Street Protesters Turn Focus on City Halls
Bloomberg
Advocates for the poor are using the Occupy Wall Street protests in city halls to push municipalities to divest from banks blamed by demonstrators for the global financial crisis and persistent unemployment in its wake.
http://jlne.ws/vDyF8I
World chefs: Vietnamese street meets high finance
Reuters via Yahoo! News
Making and selling Vietnamese street food may seem a world away from dealing in World Bank debt, but Anh Vu does both, and says that working a stall in East London markets sharpens the skills needed to thrive in investment banking.
http://jlne.ws/uXtOhP
SIFMA Statement on Changes to HARP
Release Date: October 24, 2011
Contact: Katrina Cavalli, 212.313.1181, kcavalli@sifma.org
SIFMA Statement on Changes to HARP
New York, NY, October 24, 2011–SIFMA today issued the following statement from Randy Snook, executive vice president, business policies and practices, on the Federal Housing Finance Agency’s (FHFA) announcement of a number of changes to the Home Affordable Refinancing Program (HARP) that aim to expand the number of borrowers who are able to refinance their mortgage through this program:
“SIFMA supports FHFA’s efforts to improve the access of underwater borrowers to refinancing opportunities by removing some of the impediments in the original HARP program. Improving the ability of mortgage borrowers to take advantage of low interest rates and obtain manageable monthly payments should help both borrowers and the economy, and we commend FHFA for their work on this issue. Importantly, based on today’s release, the FHFA’s approach aims to preserve the confidence of investors in mortgage-backed securities. Ensuring continued liquidity and investor confidence is essential to preserving the continued supply of affordable mortgage credit.”
-30-
The Securities Industry and Financial Markets Association (SIFMA) brings together the shared interests of hundreds of securities firms, banks and asset managers. SIFMA's mission is to support a strong financial industry, investor opportunity, capital formation, job creation and economic growth, while building trust and confidence in the financial markets. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.
Contact: Katrina Cavalli, 212.313.1181, kcavalli@sifma.org
SIFMA Statement on Changes to HARP
New York, NY, October 24, 2011–SIFMA today issued the following statement from Randy Snook, executive vice president, business policies and practices, on the Federal Housing Finance Agency’s (FHFA) announcement of a number of changes to the Home Affordable Refinancing Program (HARP) that aim to expand the number of borrowers who are able to refinance their mortgage through this program:
“SIFMA supports FHFA’s efforts to improve the access of underwater borrowers to refinancing opportunities by removing some of the impediments in the original HARP program. Improving the ability of mortgage borrowers to take advantage of low interest rates and obtain manageable monthly payments should help both borrowers and the economy, and we commend FHFA for their work on this issue. Importantly, based on today’s release, the FHFA’s approach aims to preserve the confidence of investors in mortgage-backed securities. Ensuring continued liquidity and investor confidence is essential to preserving the continued supply of affordable mortgage credit.”
-30-
The Securities Industry and Financial Markets Association (SIFMA) brings together the shared interests of hundreds of securities firms, banks and asset managers. SIFMA's mission is to support a strong financial industry, investor opportunity, capital formation, job creation and economic growth, while building trust and confidence in the financial markets. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.
Senin, 24 Oktober 2011
Top Interest Rate Headlines 10-24-2011: Treasury Eyes First New Debt Type Since TIPS
Treasury Eyes First New Debt Type Since TIPS
By Liz Capo McCormick, Bloomberg
The U.S., seeking to attract investors who might otherwise avoid Treasuries amid a $1.3 trillion budget deficit, is considering the sale of floating- rate notes in what would be its first new security since it began offering inflation-linked debt 14 years ago.
http://jlne.ws/nh7Kho
Merrill Lynch’s derivatives set sail for safe harbors
By Lisa Pollack, FT.com
Over the last week, news outlets and bloggers have discussed Bank of America’s move to shift derivatives exposures from its Merrill Lynch unit to its deposit-taking, FDIC-insured bank.
http://jlne.ws/tN05rB
Creditors’ decade-long battle with Argentina shows just how tangled sovereign defaults can be
The Economist
AS GREECE flirts with disaster and several other European countries buckle under heavy debts, creditors’ experience with Argentina should serve as a sobering reminder about the mess that can follow a sovereign default.
http://jlne.ws/rE30Mo
Bond-Fund Stars Fall as Bets Backfire, but They Fight On
By MIN ZENG, WSJ.com
It's been a tough year for bond-fund stars. Longtime outperformers in mutual-fund rankings Dan Fuss, co-portfolio manager of the Loomis Sayles Bond Fund at Loomis Sayles & Co, and Michael Hasenstab, portfolio manager of Templeton Global Bond Fund and co-director of Franklin Templeton Fixed Income Group's international bond department, were tripped up by a surprising bull run in the safe-haven U.S. Treasury bonds and a bearish turn in emerging-market bonds during the third quarter.
http://jlne.ws/mSFtnl
Chicago Fed index on U.S. economy improves
By Nick Timiraos, WSJ.com
The Obama administration is revamping a program that’s designed to let more homeowners refinance their mortgages even if they don’t have any equity. This isn’t a new program, but instead attempts to turbo-charge an existing federal initiative called the Home Affordable Refinance Program.
http://jlne.ws/mRVxYk
Number of failed banks in U.S. hits 83 for the year
Associated Press
Regulators have closed two small banks in Georgia and one in Florida, raising to 83 the number of U.S. banks that have failed this year.
http://jlne.ws/qH84j9
Global Financial Regulation: A Goal Many Espouse But Can It Be Done?
By Ron Synovitz, Eurasia Review
Calls for a more coordinated system of international financial regulation have been growing as the Occupy Wall Street protests in New York inspire similar demonstrations around the world.
http://jlne.ws/ra9RT3
U.S. rating likely to be downgraded again
By Walter Brandimarte, Reuters
The United States will likely suffer the loss of its triple-A credit rating from another major rating agency by the end of this year due to concerns over the deficit, Bank of America Merrill Lynch forecasts.
http://jlne.ws/roA4op
Twelve Questions on Obama’s Plan to Expand the Home Affordable Refinance Program
By Nick Timiraos, WSJ.com
The Obama administration is revamping a program that’s designed to let more homeowners refinance their mortgages even if they don’t have any equity
http://jlne.ws/oVZWfY
What to look for in Eurozone rescue plan
Matt Turner, Financial News
European leaders on Sunday took their first steps toward a new plan, which leaders hope to finalise at another summit on Wednesday, to stem the eurozone crisis.
http://jlne.ws/nqplbT
Vatican calls for global authority on economy
The Vatican called on Monday for the establishment of a "global public authority" and a "central world bank" to rule over financial institutions that have become outdated and often ineffective in dealing fairly with crises.
http://jlne.ws/pMRwEI
Economics focus: Unrest in peace
The Economist
AFTER two decades of stable growth and mostly quiet streets the rich world has become an unruly place. Hundreds of protesters have been camped in New York’s financial district since September, inspiring similar movements in large cities around the world. In Rome the protests turned violent as demonstrators set cars alight and hurled rocks at police
http://jlne.ws/nGDsnP
So Much for the Volcker Rule
Even in 298 pages, regulators can't decide what to regulate.
WSJ
If you tried to write a parody of the uncertainty and confusion triggered by federal rule-making, it would be hard to top the latest proposal from Washington's financial regulators. So here's an ironic hat tip to the bureaucrats who wrote the draft Volcker Rule, which will allegedly limit risk-taking at financial firms backed by taxpayers.
http://jlne.ws/oL9xj1
What Is a Banker Worth? Here Is One Answer
By KEVIN ROOSE, NY Times
It has been argued in certain circles that Wall Street is worthless. Unproductive. Devoid of social value. Luckily, thanks to a new Web site, bankers losing sleep wondering about their usefulness can find out exactly how much they’re worth.
http://jlne.ws/n5YU4z
US Running Out Of Time To Meet Basel 2.5 Deadline
By Katy Burne, DOW JONES NEWSWIRES
The clock is ticking for U.S. banking regulators trying to meet a year-end deadline for ensuring bigger capital buffers at the blogspot firms they oversee. The Basel Committee on Banking Supervision issued a progress report Tuesday on the efforts under way by regulators in nearly 30 jurisdictions to overhaul minimum capital requirements of their domestic banks.
http://jlne.ws/ri7JtM
Greek Collateral Key to Averting Default in Swap: Euro Credit
Bloomberg
Europe's efforts to persuade bondholders to forgo part of their Greek loans without triggering a default hinge on how write downs are twinned with the provision of top-rated collateral.
http://jlne.ws/mVZ8Tz
BOE Tucker: Clear Exchange-Traded Derivatives Centrally
Jason Douglas, Dow Jones Newswires
Transactions involving exchange-traded derivatives ought to be cleared through central counterparties, Bank of England policy maker Paul Tucker said Monday.
http://jlne.ws/nz0Irv
Banks must find E108bn in new capital
By Alex Barker, Financial Times
Europe’s big banks will be forced to find E108bn of fresh capital over the next six to nine months under a deal to strengthen the banking system that is to be unveiled by European Union leaders.
http://jlne.ws/pKyKn2
Speech By Federal Reserve Vice Chair Janet L. Yellen At The 2011 Annual Meeting Of The Financial Management Association International, Denver, Colorado On The Outlook For The U.S. Economy And Economic Policy
Press Release
http://jlne.ws/oqjkcU
Financial Regulators Approved by Senate to Play Dodd-Frank Roles
By Jesse Hamilton, Bloomberg
The U.S. Senate confirmed three of President Barack Obama’s nominees for financial-regulator posts, including additions to the Securities and Exchange Commission and Commodity Futures Trading Commission who will have a say in Dodd-Frank Act rulemaking.
http://jlne.ws/psrPD4
By Liz Capo McCormick, Bloomberg
The U.S., seeking to attract investors who might otherwise avoid Treasuries amid a $1.3 trillion budget deficit, is considering the sale of floating- rate notes in what would be its first new security since it began offering inflation-linked debt 14 years ago.
http://jlne.ws/nh7Kho
Merrill Lynch’s derivatives set sail for safe harbors
By Lisa Pollack, FT.com
Over the last week, news outlets and bloggers have discussed Bank of America’s move to shift derivatives exposures from its Merrill Lynch unit to its deposit-taking, FDIC-insured bank.
http://jlne.ws/tN05rB
Creditors’ decade-long battle with Argentina shows just how tangled sovereign defaults can be
The Economist
AS GREECE flirts with disaster and several other European countries buckle under heavy debts, creditors’ experience with Argentina should serve as a sobering reminder about the mess that can follow a sovereign default.
http://jlne.ws/rE30Mo
Bond-Fund Stars Fall as Bets Backfire, but They Fight On
By MIN ZENG, WSJ.com
It's been a tough year for bond-fund stars. Longtime outperformers in mutual-fund rankings Dan Fuss, co-portfolio manager of the Loomis Sayles Bond Fund at Loomis Sayles & Co, and Michael Hasenstab, portfolio manager of Templeton Global Bond Fund and co-director of Franklin Templeton Fixed Income Group's international bond department, were tripped up by a surprising bull run in the safe-haven U.S. Treasury bonds and a bearish turn in emerging-market bonds during the third quarter.
http://jlne.ws/mSFtnl
Chicago Fed index on U.S. economy improves
By Nick Timiraos, WSJ.com
The Obama administration is revamping a program that’s designed to let more homeowners refinance their mortgages even if they don’t have any equity. This isn’t a new program, but instead attempts to turbo-charge an existing federal initiative called the Home Affordable Refinance Program.
http://jlne.ws/mRVxYk
Number of failed banks in U.S. hits 83 for the year
Associated Press
Regulators have closed two small banks in Georgia and one in Florida, raising to 83 the number of U.S. banks that have failed this year.
http://jlne.ws/qH84j9
Global Financial Regulation: A Goal Many Espouse But Can It Be Done?
By Ron Synovitz, Eurasia Review
Calls for a more coordinated system of international financial regulation have been growing as the Occupy Wall Street protests in New York inspire similar demonstrations around the world.
http://jlne.ws/ra9RT3
U.S. rating likely to be downgraded again
By Walter Brandimarte, Reuters
The United States will likely suffer the loss of its triple-A credit rating from another major rating agency by the end of this year due to concerns over the deficit, Bank of America Merrill Lynch forecasts.
http://jlne.ws/roA4op
Twelve Questions on Obama’s Plan to Expand the Home Affordable Refinance Program
By Nick Timiraos, WSJ.com
The Obama administration is revamping a program that’s designed to let more homeowners refinance their mortgages even if they don’t have any equity
http://jlne.ws/oVZWfY
What to look for in Eurozone rescue plan
Matt Turner, Financial News
European leaders on Sunday took their first steps toward a new plan, which leaders hope to finalise at another summit on Wednesday, to stem the eurozone crisis.
http://jlne.ws/nqplbT
Vatican calls for global authority on economy
The Vatican called on Monday for the establishment of a "global public authority" and a "central world bank" to rule over financial institutions that have become outdated and often ineffective in dealing fairly with crises.
http://jlne.ws/pMRwEI
Economics focus: Unrest in peace
The Economist
AFTER two decades of stable growth and mostly quiet streets the rich world has become an unruly place. Hundreds of protesters have been camped in New York’s financial district since September, inspiring similar movements in large cities around the world. In Rome the protests turned violent as demonstrators set cars alight and hurled rocks at police
http://jlne.ws/nGDsnP
So Much for the Volcker Rule
Even in 298 pages, regulators can't decide what to regulate.
WSJ
If you tried to write a parody of the uncertainty and confusion triggered by federal rule-making, it would be hard to top the latest proposal from Washington's financial regulators. So here's an ironic hat tip to the bureaucrats who wrote the draft Volcker Rule, which will allegedly limit risk-taking at financial firms backed by taxpayers.
http://jlne.ws/oL9xj1
What Is a Banker Worth? Here Is One Answer
By KEVIN ROOSE, NY Times
It has been argued in certain circles that Wall Street is worthless. Unproductive. Devoid of social value. Luckily, thanks to a new Web site, bankers losing sleep wondering about their usefulness can find out exactly how much they’re worth.
http://jlne.ws/n5YU4z
US Running Out Of Time To Meet Basel 2.5 Deadline
By Katy Burne, DOW JONES NEWSWIRES
The clock is ticking for U.S. banking regulators trying to meet a year-end deadline for ensuring bigger capital buffers at the blogspot firms they oversee. The Basel Committee on Banking Supervision issued a progress report Tuesday on the efforts under way by regulators in nearly 30 jurisdictions to overhaul minimum capital requirements of their domestic banks.
http://jlne.ws/ri7JtM
Greek Collateral Key to Averting Default in Swap: Euro Credit
Bloomberg
Europe's efforts to persuade bondholders to forgo part of their Greek loans without triggering a default hinge on how write downs are twinned with the provision of top-rated collateral.
http://jlne.ws/mVZ8Tz
BOE Tucker: Clear Exchange-Traded Derivatives Centrally
Jason Douglas, Dow Jones Newswires
Transactions involving exchange-traded derivatives ought to be cleared through central counterparties, Bank of England policy maker Paul Tucker said Monday.
http://jlne.ws/nz0Irv
Banks must find E108bn in new capital
By Alex Barker, Financial Times
Europe’s big banks will be forced to find E108bn of fresh capital over the next six to nine months under a deal to strengthen the banking system that is to be unveiled by European Union leaders.
http://jlne.ws/pKyKn2
Speech By Federal Reserve Vice Chair Janet L. Yellen At The 2011 Annual Meeting Of The Financial Management Association International, Denver, Colorado On The Outlook For The U.S. Economy And Economic Policy
Press Release
http://jlne.ws/oqjkcU
Financial Regulators Approved by Senate to Play Dodd-Frank Roles
By Jesse Hamilton, Bloomberg
The U.S. Senate confirmed three of President Barack Obama’s nominees for financial-regulator posts, including additions to the Securities and Exchange Commission and Commodity Futures Trading Commission who will have a say in Dodd-Frank Act rulemaking.
http://jlne.ws/psrPD4
Fed Governor Elizabeth A. Duke Speech: The Federal Reserve System and Individual Financial Planning
Governor Elizabeth A. Duke
At the 2011 Virginia Beach Financial Planning Day, Virginia Beach, Virginia
October 22, 2011
The Federal Reserve System and Individual Financial Planning
Good morning. It is a pleasure to be here in my hometown of Virginia Beach and to welcome all of you to Financial Planning Day. I am proud to see our city recognizes that helping families plan for a more secure financial future is good for citizens and, at the same time, it makes the economic base of the entire city stronger. I am also pleased, and more than a little impressed, to see so many of you taking time out of your busy lives to focus on this important topic. I hope you find, as I have, that the time you invest in this endeavor yields a lifetime of personal and financial dividends. Knowledge is power, and I submit that financial knowledge is also security.
Importance of Financial Planning to the Federal Reserve
You might wonder why a Federal Reserve Board Governor was invited to speak about individual household financial planning. That's a fair question given that the Federal Reserve System's structure was designed by Congress to give it a broad perspective on the U.S. economy. Most of the Fed's actions are indeed focused on the whole economy. But the relationship between your personal financial interests and the interests of the national economy is more closely aligned than you might think. Let me explain.
There is, in fact, a direct relationship between household financial stability and the stability of the U.S. economy. As building blocks of the economy, the financial health of each household contributes to the financial health of the country as a whole. Thus, the Federal Reserve has an inherent interest in the financial stability and strength of individual households, whose spending, saving, and investing significantly impact economic growth. Financially stable families also make the economy run more smoothly as these families face less economic risk and have more economic mobility. Ultimately, financially secure households are the backbone of a strong domestic economy.
Indeed, the condition of household finances is a key factor in the sluggish pace of recovery that we are seeing today. In the run-up to the financial crisis, households became increasingly over-leveraged, as the amount of debt from mortgages, credit cards, student loans, and other liabilities outpaced income. Between 2001 and 2007, the household debt-to-income ratio skyrocketed, increasing by more than it had in the prior 45 years.1 And both household debt-to-income and household debt-to-assets ratios reached their highest points since 1950.
Beginning in 2008, in the face of rising unemployment and falling home values, households reduced spending and increased saving. Although many households have suffered tremendous financial hardship, in the aggregate, U.S. consumers have moved from a near-zero savings rate in 2005 to a savings rate that is currently running around 5 percent. In addition, household debt levels have contracted notably: Mortgage debt and consumer debt have declined 7 percent and 5 percent, respectively, since mid-2008. This decline partly reflects the weakness in the economy: Tight underwriting standards have damped new loan originations, and a sizeable amount of debt has been discharged through bankruptcies or foreclosures. But households also appear to have a greater aversion to debt than in the past, and a renewed interest in paying down debt more aggressively. Because of smaller debt balances and lower interest rates, the share of aggregate household income devoted to debt payments is at its lowest level since 1994. Going forward, as income and asset values recover, these improvements in the aggregate household position should be felt by more and more U.S. households.
The statistics may show that the consumer sector of our economy is improving, but I know that financial instability remains a reality for many families and I am quite aware of the difficult questions and painful decisions many of them face every day. Questions like: How can I plan for my children's higher education, my own retirement, and even emergency situations when I'm struggling with today's expenses? Yet, today, that type of planning is even more important, as is gaining a basic understanding of savings, investing, and financing options for these life events.
More and more often, Americans are finding they have to be active in ensuring their financial security. But as they wade into financial decisionmaking, they are faced with more complex decisions and numerous and complicated financial products from which to choose. In fact, Federal Reserve Chairman Bernanke has said, "Buying a home, saving for retirement or for children's education or even effectively managing the family budget now requires more financial sophistication than ever before."2
He has also said that financially literate consumers "make the financial marketplace work better, and they are better-informed citizens as well." To that end, the Federal Reserve System has made financial literacy a top priority.
Well-informed, financially educated consumers are in a better position to improve their economic security and well-being. In turn, these financially secure families are also better able to contribute to thriving communities and thereby further foster community economic development. And, as these communities thrive, the marketplace as a whole becomes more effective and efficient.3 Clearly, life-long financial education and the ready availability of decisionmaking tools and assistance are essential to this process.
This process also makes clear why the City of Virginia Beach and the Federal Reserve share an interest in your economic well-being. So let me now set the stage for the day with some basic financial planning suggestions and information about Federal Reserve resources that you might use as you develop and implement your own financial plans.
Create a Personal Financial Plan
Your attendance here today shows that you already recognize the importance of the first recommendation I will offer: Create a personal financial plan. Having a financial plan or strategy will help you to achieve your financial goals and increase your likelihood of being financially healthy in the long run. I stress that you are wise to make your financial decisions with an eye toward achieving long-term goals. This will help you become more financially secure and satisfied. Living in the moment puts you at greater financial risk and leaves you with a more limited selection of financial products.
The Federal Reserve Bank of Dallas offers a popular financial planning publication, Building Wealth. In it, individuals and families seeking help to develop a plan for building personal wealth will find an overview of personal asset-building strategies that includes setting financial goals, budgeting, saving and investing, managing debt, and understanding credit reports and credit scores. The Dallas Fed makes Building Wealth available online in both English and Spanish, and has created an interactive version of the publication, making it usable as a personal finance education resource for schools, nonprofit community organizations, and financial services providers.4
Another valuable online resource is the Federal Reserve Bank of San Francisco's Guide to Financial Literacy. This free publication explains what level of financial education is appropriate for a variety of age groups, offers guidance for consumers making key financial decisions at different stages of life, and includes a compendium of financial education resources that address these needs.5
Saving is Important
As you develop a financial plan, I offer my second recommendation: Saving is important, and you're going to need to increase your savings to manage your financial lives successfully. American families rely on savings and investments to achieve a secure retirement, save for their children's education, buy homes, start businesses, manage financial emergencies, and pass on wealth and opportunities to the next generation. This not only makes financial sense, but there's a growing body of evidence that families with savings and assets generally do better in life than those without in terms of social, behavioral, educational, and economic outcomes.
I am aware that during tough economic times, saving is a challenge for people at all stages of life. Starting salaries for recent college graduates have declined, which means that young Americans who are employed have fewer resources for saving and investing than previous generations. On the other end of the spectrum, many older workers are delaying retirement because they have insufficient assets to fund their retirement. Even more troubling is research showing that many consumers who should be saving for retirement have been forced to take hardship withdrawals from their 401(k) plans. According to an analysis by Vanguard, hardship withdrawals increased by 49 percent between 2005 and 2010.6
The increasing use of retirement savings for other purposes is particularly problematic now that employers have increasingly shifted the responsibility for saving for retirement toward individual employees. Having a secure retirement is a high priority and a significant long-term goal for many Americans, so it is especially important that they have an understanding of the level of resources they will need in retirement and the investment options available to them.
Despite these recent trends, most people have the ability to save if they plan accordingly. One way to establish and maintain regular savings is through automation. Think about your own 401(k). At one point, perhaps when you were hired, you made one decision to save, and the rest was done for you--automatic payroll deductions, investments, statements, etc. Automatic payroll deductions can also be established to build general savings, savings for college, and other critical pre-retirement assets. Experiments with automatic savings programs like "Auto401(k)s," the "Save More Tomorrow" concept, and "AutoSave" have generated encouraging results.
In addition to tax-advantaged and automatic savings programs, there are a number of targeted savings initiatives that can help families save. For example, low-income residents of Virginia are eligible to participate in the Virginia Individual Development Accounts (VIDA) Program, which matches $2 for every $1 saved in a VIDA account. Like other individual development accounts (IDA), this program encourages low-income individuals to save for specific needs by matching the contributions of the account holder. In the case of VIDA, the combined savings can be used for the purchase of a first home, to start a business, or to finance higher education.
Similar in concept to the IDA, a new child development account (CDA) is being piloted for a small number of third and fourth graders in Alexandria, Virginia that can be used later in life to further the child's education, to purchase a home, or to capitalize a small business. Under the Child$ave program, contributions to the account can be made from any private source with businesses encouraged to establish accounts bearing their name, such as, "Jonathan Swift, a Safeway Scholar." And this type of initiative is popping up all over the country. In San Francisco, the "Kindergarten to College" initiative sets up college savings accounts for all of the city's kindergartners. In Oklahoma, the "SEED for Oklahoma Kids" experiment establishes an account at the birth of a child and "seeds" each account with $1,000. On an annual basis, eligible families can earn matching funds for their contributions to a parallel account they open within the state's tax-advantaged College Savings Plan.
There is some evidence that financial knowledge is the result of regular saving, rather than the source. So these types of programs offer children and adults the opportunity to manage their own account, thereby fostering financial education while encouraging saving.
Create an Emergency Fund
My third recommendation is to create an emergency fund in addition to your longer-term savings and investments. These frightening statistics demonstrate why: Nearly half of all Americans consider themselves financially fragile, meaning that they would "probably" (22.2 percent) or "certainly" (27.9 percent) be unable to come up with $2,000 in 30 days to cope with a financial emergency.7 Similarly, almost half of all Americans report having trouble making ends meet.8 Almost half of all households surveyed in the 2009 Survey of Consumer Finances had less than $3,000 in liquid savings, and 20 percent had less than $3,000 in broader savings.9 Finally, in a recent survey on the effects of unemployment and the recession, 70 percent of workers reported withdrawing funds saved in college and retirement accounts for present day needs, likely leading to a significant loss of wealth in future years.10
These circumstances emphasize the importance of unrestricted savings, or savings that can be used for emergencies or precautionary purposes. Cobbling together even a minimum amount of emergency savings can have a significant impact, especially among lower-income households. In fact, the Consumer Federation of America found that low-income families with $500 in emergency savings had better financial outcomes than moderate-income families with lower savings. In addition, recent research found that households that are "liquid-asset poor" are two to three times more likely than those with liquid assets to experience "material hardship" after a job loss, health emergency, death in the family, or other adverse event.11
Clearly, emergency savings are important for households at every income level. For some, a tax refund or tax credit is a possible source of emergency funds. The Federal Reserve Bank of St. Louis has a user-friendly publication titled, You've Earned It! What the Earned Income Tax Credit Can Do for You.12 This booklet explains how the Earned Income Tax Credit (EITC) works and who qualifies for the credit. Millions of low-income, working Americans are unaware that they are eligible for thousands of dollars in tax credits. Receiving a windfall such as the EITC is the perfect opportunity to establish savings that would be available for unexpected expenses. And thanks to the IRS form 8888, which has been around just a couple of years now, you can send your EITC refund directly and automatically to up to three different accounts.
Manage Your Debt
My final suggestion is to manage your debt. Loans are an excellent way to use future income to pay for an important purchase today, such as a car, an education, or a home. But before taking out a loan--a student loan, for example--you should ask yourself three questions.
First, does the value of the purchase justify the payments you will have to make? Education is one of the best investments you can make, but think about whether the extra earnings from a particular course of study will enable you to earn enough to make loan payments in the future. Furthermore, when preparing to manage student debt, consider the full breadth of expenses--room and board, books and supplies, etc.--that you will incur to determine the total amount you will need to borrow. According to the American Council on Education, half of all graduates in 2004 used credit cards for school expenses.13 You want to avoid having to do that.
The second question is closely related: Will you be able to make the payments on the loan even if everything doesn't go as you plan or if payments are higher in the future? Consider the highest payment you will potentially face rather than just the initial payment.
And finally, ask yourself if you have found the best loan for you. Ask lenders questions, read the information they give you, and make sure you know everything about the terms of your loan. And shop around for the best deal.
In addition to thinking carefully about the initial loan decision, it is important to periodically re-evaluate your debt position. Sometimes the best way to invest your new savings is to pay down high-cost debt. Another way to save money is to refinance your mortgage into lower interest rates. Through the government's "Home Affordable Refinance Program," borrowers with mortgages through Fannie Mae or Freddie Mac can refinance their loans even if they owe more than the home's current value. Interest rates and mortgage underwriting are changing continually so I urge you to investigate this option on a regular basis. If you are unable to refinance your debt due to credit problems or if you are struggling to make payments, I encourage you to work with a non-profit housing counselor or debt counselor to identify possible solutions.
Conclusion
It has been my pleasure to share my thoughts with you on this important topic. As you plan for your financial future, please keep in mind that planning is a process. You have taken the important first step in this process simply by being here to learn more about tools and resources available to help you and your family. But putting those tools to use is not necessarily easy. I know from first-hand experience that understanding the basics of nutrition doesn't make it any easier to stay on a diet. But I also know from experience that making a plan and sticking to it brings real success whether in the form of a healthier lifestyle or in the form of a more secure financial future.
And as I said at the outset, as we all work to improve our individual financial stability, we will ultimately build a stronger economy. I wish you all great success.
1. Pence, Karen M. 2011. "Comment on `Financially Fragile Households: Evidence and Implications.' " Brookings Papers on Economic Activity. Spring: 141-145. Return to text
2. See http://dallasfed.org/ca/wealth/pdfs/wealth.pdf (PDF). Return to text
3. Marianne Hilgert, Jeanne Hogarth, and Sondra Beverly (2003), "Household Financial Management: The Connection between Knowledge and Behavior," Federal Reserve Bulletin. Return to text
4. Building Wealth can be found at www.dallasfed.org/ca/wealth/index.cfm. Return to text
5. The Guide to Financial Literacy Resource can be found at www.frbsf.org/community/webresources/bankersguide.pdf (PDF). Return to text
6. Stephen Utkus and Jean Young (2011), "The Great Recession and 401(k) Plan Participant Behavior," Vanguard Research. Return to text
7. Annamaria Lusardi, Daniel Schneider, and Peter Tufano (2011), "Financially Fragile Households: Evidence and Implications (PDF)," Brookings Papers on Economic Activity (Washington, D.C.: Brookings Institution , Spring). Return to text
8. Annamaria Lusardi (2011), "Americans' Financial Capability (PDF)," report prepared for the Financial Crisis Inquiry Commission. Return to text
9. Bricker, Bucks, Kennickell, Mach and Moore, "Surveying the Aftermath of the Storm: Changes in Family Finances from 2007 to 2009." Return to text
10. Debbie Borie-Holtz, D., Carl Van Horn, and Cliff Zukin (2010), "No End in Sight: The Agony of Prolonged Unemployment (PDF)," New Brunswick, NJ: John J. Heldrich Center for Workforce Development, Rutgers University, May 2010. Return to text
11. Signe-Mary McKernan, Caroline Ratcliffe, and Katie Vinopal (2009), "Do Assets Help Families Cope with Adverse Events? (PDF)" The Urban Institute. Return to text
12. You've Earned It! What the Earned Income Tax Credit Can Do for You can be found at www.stlouisfed.org/community_development/assets/pdf/EITC-brochure.pdf (PDF). Return to text
13. American Council on Education, June 2005. Return to text
At the 2011 Virginia Beach Financial Planning Day, Virginia Beach, Virginia
October 22, 2011
The Federal Reserve System and Individual Financial Planning
Good morning. It is a pleasure to be here in my hometown of Virginia Beach and to welcome all of you to Financial Planning Day. I am proud to see our city recognizes that helping families plan for a more secure financial future is good for citizens and, at the same time, it makes the economic base of the entire city stronger. I am also pleased, and more than a little impressed, to see so many of you taking time out of your busy lives to focus on this important topic. I hope you find, as I have, that the time you invest in this endeavor yields a lifetime of personal and financial dividends. Knowledge is power, and I submit that financial knowledge is also security.
Importance of Financial Planning to the Federal Reserve
You might wonder why a Federal Reserve Board Governor was invited to speak about individual household financial planning. That's a fair question given that the Federal Reserve System's structure was designed by Congress to give it a broad perspective on the U.S. economy. Most of the Fed's actions are indeed focused on the whole economy. But the relationship between your personal financial interests and the interests of the national economy is more closely aligned than you might think. Let me explain.
There is, in fact, a direct relationship between household financial stability and the stability of the U.S. economy. As building blocks of the economy, the financial health of each household contributes to the financial health of the country as a whole. Thus, the Federal Reserve has an inherent interest in the financial stability and strength of individual households, whose spending, saving, and investing significantly impact economic growth. Financially stable families also make the economy run more smoothly as these families face less economic risk and have more economic mobility. Ultimately, financially secure households are the backbone of a strong domestic economy.
Indeed, the condition of household finances is a key factor in the sluggish pace of recovery that we are seeing today. In the run-up to the financial crisis, households became increasingly over-leveraged, as the amount of debt from mortgages, credit cards, student loans, and other liabilities outpaced income. Between 2001 and 2007, the household debt-to-income ratio skyrocketed, increasing by more than it had in the prior 45 years.1 And both household debt-to-income and household debt-to-assets ratios reached their highest points since 1950.
Beginning in 2008, in the face of rising unemployment and falling home values, households reduced spending and increased saving. Although many households have suffered tremendous financial hardship, in the aggregate, U.S. consumers have moved from a near-zero savings rate in 2005 to a savings rate that is currently running around 5 percent. In addition, household debt levels have contracted notably: Mortgage debt and consumer debt have declined 7 percent and 5 percent, respectively, since mid-2008. This decline partly reflects the weakness in the economy: Tight underwriting standards have damped new loan originations, and a sizeable amount of debt has been discharged through bankruptcies or foreclosures. But households also appear to have a greater aversion to debt than in the past, and a renewed interest in paying down debt more aggressively. Because of smaller debt balances and lower interest rates, the share of aggregate household income devoted to debt payments is at its lowest level since 1994. Going forward, as income and asset values recover, these improvements in the aggregate household position should be felt by more and more U.S. households.
The statistics may show that the consumer sector of our economy is improving, but I know that financial instability remains a reality for many families and I am quite aware of the difficult questions and painful decisions many of them face every day. Questions like: How can I plan for my children's higher education, my own retirement, and even emergency situations when I'm struggling with today's expenses? Yet, today, that type of planning is even more important, as is gaining a basic understanding of savings, investing, and financing options for these life events.
More and more often, Americans are finding they have to be active in ensuring their financial security. But as they wade into financial decisionmaking, they are faced with more complex decisions and numerous and complicated financial products from which to choose. In fact, Federal Reserve Chairman Bernanke has said, "Buying a home, saving for retirement or for children's education or even effectively managing the family budget now requires more financial sophistication than ever before."2
He has also said that financially literate consumers "make the financial marketplace work better, and they are better-informed citizens as well." To that end, the Federal Reserve System has made financial literacy a top priority.
Well-informed, financially educated consumers are in a better position to improve their economic security and well-being. In turn, these financially secure families are also better able to contribute to thriving communities and thereby further foster community economic development. And, as these communities thrive, the marketplace as a whole becomes more effective and efficient.3 Clearly, life-long financial education and the ready availability of decisionmaking tools and assistance are essential to this process.
This process also makes clear why the City of Virginia Beach and the Federal Reserve share an interest in your economic well-being. So let me now set the stage for the day with some basic financial planning suggestions and information about Federal Reserve resources that you might use as you develop and implement your own financial plans.
Create a Personal Financial Plan
Your attendance here today shows that you already recognize the importance of the first recommendation I will offer: Create a personal financial plan. Having a financial plan or strategy will help you to achieve your financial goals and increase your likelihood of being financially healthy in the long run. I stress that you are wise to make your financial decisions with an eye toward achieving long-term goals. This will help you become more financially secure and satisfied. Living in the moment puts you at greater financial risk and leaves you with a more limited selection of financial products.
The Federal Reserve Bank of Dallas offers a popular financial planning publication, Building Wealth. In it, individuals and families seeking help to develop a plan for building personal wealth will find an overview of personal asset-building strategies that includes setting financial goals, budgeting, saving and investing, managing debt, and understanding credit reports and credit scores. The Dallas Fed makes Building Wealth available online in both English and Spanish, and has created an interactive version of the publication, making it usable as a personal finance education resource for schools, nonprofit community organizations, and financial services providers.4
Another valuable online resource is the Federal Reserve Bank of San Francisco's Guide to Financial Literacy. This free publication explains what level of financial education is appropriate for a variety of age groups, offers guidance for consumers making key financial decisions at different stages of life, and includes a compendium of financial education resources that address these needs.5
Saving is Important
As you develop a financial plan, I offer my second recommendation: Saving is important, and you're going to need to increase your savings to manage your financial lives successfully. American families rely on savings and investments to achieve a secure retirement, save for their children's education, buy homes, start businesses, manage financial emergencies, and pass on wealth and opportunities to the next generation. This not only makes financial sense, but there's a growing body of evidence that families with savings and assets generally do better in life than those without in terms of social, behavioral, educational, and economic outcomes.
I am aware that during tough economic times, saving is a challenge for people at all stages of life. Starting salaries for recent college graduates have declined, which means that young Americans who are employed have fewer resources for saving and investing than previous generations. On the other end of the spectrum, many older workers are delaying retirement because they have insufficient assets to fund their retirement. Even more troubling is research showing that many consumers who should be saving for retirement have been forced to take hardship withdrawals from their 401(k) plans. According to an analysis by Vanguard, hardship withdrawals increased by 49 percent between 2005 and 2010.6
The increasing use of retirement savings for other purposes is particularly problematic now that employers have increasingly shifted the responsibility for saving for retirement toward individual employees. Having a secure retirement is a high priority and a significant long-term goal for many Americans, so it is especially important that they have an understanding of the level of resources they will need in retirement and the investment options available to them.
Despite these recent trends, most people have the ability to save if they plan accordingly. One way to establish and maintain regular savings is through automation. Think about your own 401(k). At one point, perhaps when you were hired, you made one decision to save, and the rest was done for you--automatic payroll deductions, investments, statements, etc. Automatic payroll deductions can also be established to build general savings, savings for college, and other critical pre-retirement assets. Experiments with automatic savings programs like "Auto401(k)s," the "Save More Tomorrow" concept, and "AutoSave" have generated encouraging results.
In addition to tax-advantaged and automatic savings programs, there are a number of targeted savings initiatives that can help families save. For example, low-income residents of Virginia are eligible to participate in the Virginia Individual Development Accounts (VIDA) Program, which matches $2 for every $1 saved in a VIDA account. Like other individual development accounts (IDA), this program encourages low-income individuals to save for specific needs by matching the contributions of the account holder. In the case of VIDA, the combined savings can be used for the purchase of a first home, to start a business, or to finance higher education.
Similar in concept to the IDA, a new child development account (CDA) is being piloted for a small number of third and fourth graders in Alexandria, Virginia that can be used later in life to further the child's education, to purchase a home, or to capitalize a small business. Under the Child$ave program, contributions to the account can be made from any private source with businesses encouraged to establish accounts bearing their name, such as, "Jonathan Swift, a Safeway Scholar." And this type of initiative is popping up all over the country. In San Francisco, the "Kindergarten to College" initiative sets up college savings accounts for all of the city's kindergartners. In Oklahoma, the "SEED for Oklahoma Kids" experiment establishes an account at the birth of a child and "seeds" each account with $1,000. On an annual basis, eligible families can earn matching funds for their contributions to a parallel account they open within the state's tax-advantaged College Savings Plan.
There is some evidence that financial knowledge is the result of regular saving, rather than the source. So these types of programs offer children and adults the opportunity to manage their own account, thereby fostering financial education while encouraging saving.
Create an Emergency Fund
My third recommendation is to create an emergency fund in addition to your longer-term savings and investments. These frightening statistics demonstrate why: Nearly half of all Americans consider themselves financially fragile, meaning that they would "probably" (22.2 percent) or "certainly" (27.9 percent) be unable to come up with $2,000 in 30 days to cope with a financial emergency.7 Similarly, almost half of all Americans report having trouble making ends meet.8 Almost half of all households surveyed in the 2009 Survey of Consumer Finances had less than $3,000 in liquid savings, and 20 percent had less than $3,000 in broader savings.9 Finally, in a recent survey on the effects of unemployment and the recession, 70 percent of workers reported withdrawing funds saved in college and retirement accounts for present day needs, likely leading to a significant loss of wealth in future years.10
These circumstances emphasize the importance of unrestricted savings, or savings that can be used for emergencies or precautionary purposes. Cobbling together even a minimum amount of emergency savings can have a significant impact, especially among lower-income households. In fact, the Consumer Federation of America found that low-income families with $500 in emergency savings had better financial outcomes than moderate-income families with lower savings. In addition, recent research found that households that are "liquid-asset poor" are two to three times more likely than those with liquid assets to experience "material hardship" after a job loss, health emergency, death in the family, or other adverse event.11
Clearly, emergency savings are important for households at every income level. For some, a tax refund or tax credit is a possible source of emergency funds. The Federal Reserve Bank of St. Louis has a user-friendly publication titled, You've Earned It! What the Earned Income Tax Credit Can Do for You.12 This booklet explains how the Earned Income Tax Credit (EITC) works and who qualifies for the credit. Millions of low-income, working Americans are unaware that they are eligible for thousands of dollars in tax credits. Receiving a windfall such as the EITC is the perfect opportunity to establish savings that would be available for unexpected expenses. And thanks to the IRS form 8888, which has been around just a couple of years now, you can send your EITC refund directly and automatically to up to three different accounts.
Manage Your Debt
My final suggestion is to manage your debt. Loans are an excellent way to use future income to pay for an important purchase today, such as a car, an education, or a home. But before taking out a loan--a student loan, for example--you should ask yourself three questions.
First, does the value of the purchase justify the payments you will have to make? Education is one of the best investments you can make, but think about whether the extra earnings from a particular course of study will enable you to earn enough to make loan payments in the future. Furthermore, when preparing to manage student debt, consider the full breadth of expenses--room and board, books and supplies, etc.--that you will incur to determine the total amount you will need to borrow. According to the American Council on Education, half of all graduates in 2004 used credit cards for school expenses.13 You want to avoid having to do that.
The second question is closely related: Will you be able to make the payments on the loan even if everything doesn't go as you plan or if payments are higher in the future? Consider the highest payment you will potentially face rather than just the initial payment.
And finally, ask yourself if you have found the best loan for you. Ask lenders questions, read the information they give you, and make sure you know everything about the terms of your loan. And shop around for the best deal.
In addition to thinking carefully about the initial loan decision, it is important to periodically re-evaluate your debt position. Sometimes the best way to invest your new savings is to pay down high-cost debt. Another way to save money is to refinance your mortgage into lower interest rates. Through the government's "Home Affordable Refinance Program," borrowers with mortgages through Fannie Mae or Freddie Mac can refinance their loans even if they owe more than the home's current value. Interest rates and mortgage underwriting are changing continually so I urge you to investigate this option on a regular basis. If you are unable to refinance your debt due to credit problems or if you are struggling to make payments, I encourage you to work with a non-profit housing counselor or debt counselor to identify possible solutions.
Conclusion
It has been my pleasure to share my thoughts with you on this important topic. As you plan for your financial future, please keep in mind that planning is a process. You have taken the important first step in this process simply by being here to learn more about tools and resources available to help you and your family. But putting those tools to use is not necessarily easy. I know from first-hand experience that understanding the basics of nutrition doesn't make it any easier to stay on a diet. But I also know from experience that making a plan and sticking to it brings real success whether in the form of a healthier lifestyle or in the form of a more secure financial future.
And as I said at the outset, as we all work to improve our individual financial stability, we will ultimately build a stronger economy. I wish you all great success.
1. Pence, Karen M. 2011. "Comment on `Financially Fragile Households: Evidence and Implications.' " Brookings Papers on Economic Activity. Spring: 141-145. Return to text
2. See http://dallasfed.org/ca/wealth/pdfs/wealth.pdf (PDF). Return to text
3. Marianne Hilgert, Jeanne Hogarth, and Sondra Beverly (2003), "Household Financial Management: The Connection between Knowledge and Behavior," Federal Reserve Bulletin. Return to text
4. Building Wealth can be found at www.dallasfed.org/ca/wealth/index.cfm. Return to text
5. The Guide to Financial Literacy Resource can be found at www.frbsf.org/community/webresources/bankersguide.pdf (PDF). Return to text
6. Stephen Utkus and Jean Young (2011), "The Great Recession and 401(k) Plan Participant Behavior," Vanguard Research. Return to text
7. Annamaria Lusardi, Daniel Schneider, and Peter Tufano (2011), "Financially Fragile Households: Evidence and Implications (PDF)," Brookings Papers on Economic Activity (Washington, D.C.: Brookings Institution , Spring). Return to text
8. Annamaria Lusardi (2011), "Americans' Financial Capability (PDF)," report prepared for the Financial Crisis Inquiry Commission. Return to text
9. Bricker, Bucks, Kennickell, Mach and Moore, "Surveying the Aftermath of the Storm: Changes in Family Finances from 2007 to 2009." Return to text
10. Debbie Borie-Holtz, D., Carl Van Horn, and Cliff Zukin (2010), "No End in Sight: The Agony of Prolonged Unemployment (PDF)," New Brunswick, NJ: John J. Heldrich Center for Workforce Development, Rutgers University, May 2010. Return to text
11. Signe-Mary McKernan, Caroline Ratcliffe, and Katie Vinopal (2009), "Do Assets Help Families Cope with Adverse Events? (PDF)" The Urban Institute. Return to text
12. You've Earned It! What the Earned Income Tax Credit Can Do for You can be found at www.stlouisfed.org/community_development/assets/pdf/EITC-brochure.pdf (PDF). Return to text
13. American Council on Education, June 2005. Return to text
Jumat, 21 Oktober 2011
Top Interest Rate Headlines 10-21-2011: Fed’s Yellen: QE3 May Be Warranted
Fed’s Yellen: QE3 May Be Warranted
By Scott Lanman and Jennifer Oldham, Bloomberg
Federal Reserve Vice Chairman Janet Yellen said a third round of large-scale securities purchases might become warranted if necessary to boost a U.S. economy challenged by unemployment and financial turmoil.
http://jlne.ws/qAD7CK
Kocherlakota backs doves on Fed communications
By Ann Saphir, Reuters
A prominent Federal Reserve policymaker who has fought recent monetary policy easing signaled his support Friday for a proposal from a dovish colleague to tie policy to specific economic goals.
http://jlne.ws/oBRD2H
Senate confirms Mark Wetjen as new CFTC commissioner
FuturesMag.com
The U.S. Senate confirmed three presidential nominees for financial regulator posts last night in a voice vote. Lawmakers approved Daniel M. Gallagher and Luis A. Aguilar as SEC commissioners, and Mark P. Wetjen was approved to serve as a CFTC commissioner.
http://jlne.ws/p8uoYq
FIA statement on Senate confirmation of Mark Wetjen as CFTC Commissioner
Press Release
The FIA congratulates Mark Wetjen on the Senate's decision to confirm his nomination to serve as a CFTC Commissioner. Mr. Wetjen has assured Congress that he will listen to all viewpoints and gather the requisite information before reaching a decision on the many complex regulatory issues facing the agency.
http://jlne.ws/9txwjC
Yellen: Fed has some options on forward guidance
By Greg Robb, MarketWatch
The Federal Reserve is considering more than one way to give greater insight to financial markets on how shifts in the economic outlook could impact the central bank's decision to hold short-term interest rates at zero, Federal Reserve Vice Chairman Janet Yellen said Friday.
http://jlne.ws/rnJell
FRB's Richard Fisher: Remarks before the Dallas Friday Group
It has been decades since I was an active member of this prestigious forum. Last night, I attended a book party for Kathryn McGarr, Cappy McGarr and Janie Strauss McGarr’s daughter. She has written a zinger of a book about her mother’s uncle, Bob Strauss, one of our most accomplished and colorful public servants.
http://jlne.ws/oyFbA0
German, French Business Confidence Falls
BY MARGIT FEHER , WILLIAM HOROBIN AND TOM MUDD, WSJ.com
Business confidence in the euro zone's top two economies continued to deteriorate in October, underscoring concerns that the currency bloc's economy could be close to stalling.
http://jlne.ws/qwGyK7
Higher Fannie, Freddie Loan Limits — Back From the Dead?
By Alan Zibel and Nick Timiraos, WSJ.com
A push by the real estate industry to restore higher limits on the size of government-backed loans is starting to have some results. But the outcome is far from certain. Around 11:30 p.m. on Thursday night, the Senate voted 60-38 to approve an amendment to a federal spending bill that would raise the maximum size of loans that can be guaranteed by government-controlled mortgage companies Fannie Mae, Freddie Mac and the Federal Housing Administration.
http://jlne.ws/pzEfjD
Troika Says Greek Debt Not Sustainable
BY WILLIAM BOSTON AND ANDREAS KISSLER, WSJ.com
A massive restructuring of Greek debt that will mean a deeper cut for private-sector investors looks a lot more likely after the so-called troika of international inspectors concluded in a report that Athens' public-sector debt load is unsustainable.
http://jlne.ws/rm1hwc
Merkel rebuffs Sarkozy on euro zone solution
By Annika Breidthardt and Daniel Flynn, Reuters
Private holders of Greek debt may need to accept losses of up to 60 percent on their investments if Greece's debt mountain is to be made more sustainable in the long-term, a downbeat analysis by the EU and IMF showed on Friday.
http://jlne.ws/n5mRr4
Portugal and the euro: In the mire
The Economist
BEFORE unveiling Portugal’s harshest budget in living memory this week, VÃtor Gaspar, the finance minister, praised the hard work of the civil servants who had prepared it. The country’s 700,000 public employees may think he has a funny way of showing his gratitude.
http://jlne.ws/rbkPrX
Chicago Mayor Stumps For Trading Firms In Swap Market Revamp
By Jacob Bunge and Katy Burne Of DOW JONES NEWSWIRES
Mayor Rahm Emanuel is barnstorming for Chicago trading firms that are vying for new business created by the financial markets law he helped push through the U.S. Congress. Emanuel in late September traveled to Washington, where he discussed the rulemaking under the Dodd-Frank financial law with the head of the Commodity Futures Trading Commission. His message: Don't shackle Chicago's small, trading-focused companies with rules designed to rein in the derivatives desks of large and interconnected dealer banks, according to people present at the meetings.
Finance Sector Says Some MiFID II Proposals Need Modifying
By Vladimir Guevarra Of DOW JONES NEWSWIRES
The European Commission's plan to increase the transparency of financial markets by overhauling regulations was broadly welcomed by industry associations Thursday, but they warned that some proposals needed to be modified to prevent them having an unintended negative impact.
http://jlne.ws/orVVTi
The LIBOR Investigation spreads to EURIBOR
Forbes
For some time now there?s been an investigation into whether LIBOR rates were mis-reported at the time of the financial crash. It looks like this investigation has now spread to EURIBOR: RBS is among the banks to have had its offices raided by European Commission officials as part of the investigation into the suppression of ...
http://jlne.ws/or8Oa1
Banks face penalties in return for bail-outs
By Gerrit Wiesmann in Berlin, Hugh Carnegy in Paris and Alex Barker in Brussels - Financial Times
Distressed European Union banks that tap national governments or the region’s E440bn rescue fund for capital will be subject to state-aid penalties, involving compulsory restructuring or – in the worst case – orderly wind-downs.
http://jlne.ws/rddLdH
Central bankers must update outdated analytical toolkit
By Gillian Tett, Financial Times
Eight years ago, Claudio Borio, a senior economist at the Bank for International Settlements, co-authored a paper which warned that the world’s financial system was spinning out of control, due to excess in the complex credit world. At the time, the paper was largely ignored, if not derided by many senior policymakers. But now it looks prescient; so much so, in fact, that Borio and his co-author, Bill White (who also used to work at the BIS), are some of the few economists who have emerged from the recent financial crisis with their reputations intact.
http://jlne.ws/nKh2zM
Banks pay out guaranteed bonuses despite ban
By Megan Murphy in London - Financial Times
Investment banks are exploiting gaps in global pay reforms to persist with some of their most contentious practices, including guaranteeing lucrative bonuses to employees regardless of their performance, industry data show.
http://jlne.ws/nVeCle
Mifid’s net cast wide to overhaul Europe trading
By Jeremy Grant and Alex Barker, Financial Times
If anyone were in any doubt about how Europe is approaching reform of financial markets after a year in which an alphabet soup of proposals has been floated, EU internal markets commissioner Michel Barnier was clear on Thursday. Speaking as the European Commission published its “Mifid II” proposals, the Frenchman said they were “a complete overhaul of the way financial markets operate in Europe”.
http://jlne.ws/n9Avo1
Struggling French Banks Fought to Avoid Oversight
By DAVID ENRICH And DAVID GAUTHIER-VILLARS, WSJ
PARIS—Two years ago, a French banker flew to Washington on an emergency mission: Persuade International Monetary Fund chief Dominique Strauss-Kahn that his concerns about the health of the European banking sector were unfounded. The trip was a success. Mr. Strauss-Kahn agreed to keep his fears under wraps to avoid causing market panic, according to people familiar with the matter.
http://jlne.ws/nvDJk5
ECB Said to Consider Increasing Loans for Collateral Disclosure
BusinessWeek
The European Central Bank is considering lending more money against asset-backed securities where issuers provide additional information about the loans securing the bonds, said a person familiar with the matter.
http://jlne.ws/nVMoOa
As UBS Shrinks, What of Its Asian Operations?
Wall Street Journal Blogs
As UBS prepares to shrink its investment bank, the key question is what happens to its successful Asian business.
http://jlne.ws/q7wxT9
A New UBS Boss Just Took Over, And Word Is He's Slashing Tons Of Jobs
Business Insider
Less than a month as UBS's interim chief, Sergio Ermotti is planning to slash the size of the investment banking division following the rogue trading scandal that cost the embattled Swiss bank $2.3 billion, the WSJ reported.
http://jlne.ws/nvZulE
Deutsche Bank unit BHF to cut 270 jobs-sources
Reuters Company Finance News via Yahoo! Finance
Deutsche Bank AG (DBKGn.DE: Quote , Profile , Research , Stock Buzz )unit BHF told staff it will shed 270 jobs, two sources close tothe bank said, as the parent company struggles ...
http://jlne.ws/nlO0uq
Capital One Profit Tops Estimates as Fewer Borrowers Default
BusinessWeek
Capital One Financial Corp., the credit-card issuer seeking approval to purchase ING Groep NV's U.S. online bank, said profit advanced 1.3 percent as lending increased and fewer borrowers defaulted.
http://jlne.ws/pFgMxb
Fifth Third Flies: Financial Winner
TheStreet.com
Fifth Third Bancorp was the big winner on a strong Thursday for most U.S. financials, with shares rising over 9% to close at $11.63. The Cincinnati lender beat third-quarter earnings estimates with a profit of 40 cents a share, which was a 14% improvement over the second quarter.
http://jlne.ws/qjpVfa
Mifid II proposals: early reaction
FT Finance News (ext) via Yahoo! Finance
A round-up of the initial reactions from market participants to the publication of the proposals to update the Mifid directive governing European financial markets
http://jlne.ws/nKENdV
By Scott Lanman and Jennifer Oldham, Bloomberg
Federal Reserve Vice Chairman Janet Yellen said a third round of large-scale securities purchases might become warranted if necessary to boost a U.S. economy challenged by unemployment and financial turmoil.
http://jlne.ws/qAD7CK
Kocherlakota backs doves on Fed communications
By Ann Saphir, Reuters
A prominent Federal Reserve policymaker who has fought recent monetary policy easing signaled his support Friday for a proposal from a dovish colleague to tie policy to specific economic goals.
http://jlne.ws/oBRD2H
Senate confirms Mark Wetjen as new CFTC commissioner
FuturesMag.com
The U.S. Senate confirmed three presidential nominees for financial regulator posts last night in a voice vote. Lawmakers approved Daniel M. Gallagher and Luis A. Aguilar as SEC commissioners, and Mark P. Wetjen was approved to serve as a CFTC commissioner.
http://jlne.ws/p8uoYq
FIA statement on Senate confirmation of Mark Wetjen as CFTC Commissioner
Press Release
The FIA congratulates Mark Wetjen on the Senate's decision to confirm his nomination to serve as a CFTC Commissioner. Mr. Wetjen has assured Congress that he will listen to all viewpoints and gather the requisite information before reaching a decision on the many complex regulatory issues facing the agency.
http://jlne.ws/9txwjC
Yellen: Fed has some options on forward guidance
By Greg Robb, MarketWatch
The Federal Reserve is considering more than one way to give greater insight to financial markets on how shifts in the economic outlook could impact the central bank's decision to hold short-term interest rates at zero, Federal Reserve Vice Chairman Janet Yellen said Friday.
http://jlne.ws/rnJell
FRB's Richard Fisher: Remarks before the Dallas Friday Group
It has been decades since I was an active member of this prestigious forum. Last night, I attended a book party for Kathryn McGarr, Cappy McGarr and Janie Strauss McGarr’s daughter. She has written a zinger of a book about her mother’s uncle, Bob Strauss, one of our most accomplished and colorful public servants.
http://jlne.ws/oyFbA0
German, French Business Confidence Falls
BY MARGIT FEHER , WILLIAM HOROBIN AND TOM MUDD, WSJ.com
Business confidence in the euro zone's top two economies continued to deteriorate in October, underscoring concerns that the currency bloc's economy could be close to stalling.
http://jlne.ws/qwGyK7
Higher Fannie, Freddie Loan Limits — Back From the Dead?
By Alan Zibel and Nick Timiraos, WSJ.com
A push by the real estate industry to restore higher limits on the size of government-backed loans is starting to have some results. But the outcome is far from certain. Around 11:30 p.m. on Thursday night, the Senate voted 60-38 to approve an amendment to a federal spending bill that would raise the maximum size of loans that can be guaranteed by government-controlled mortgage companies Fannie Mae, Freddie Mac and the Federal Housing Administration.
http://jlne.ws/pzEfjD
Troika Says Greek Debt Not Sustainable
BY WILLIAM BOSTON AND ANDREAS KISSLER, WSJ.com
A massive restructuring of Greek debt that will mean a deeper cut for private-sector investors looks a lot more likely after the so-called troika of international inspectors concluded in a report that Athens' public-sector debt load is unsustainable.
http://jlne.ws/rm1hwc
Merkel rebuffs Sarkozy on euro zone solution
By Annika Breidthardt and Daniel Flynn, Reuters
Private holders of Greek debt may need to accept losses of up to 60 percent on their investments if Greece's debt mountain is to be made more sustainable in the long-term, a downbeat analysis by the EU and IMF showed on Friday.
http://jlne.ws/n5mRr4
Portugal and the euro: In the mire
The Economist
BEFORE unveiling Portugal’s harshest budget in living memory this week, VÃtor Gaspar, the finance minister, praised the hard work of the civil servants who had prepared it. The country’s 700,000 public employees may think he has a funny way of showing his gratitude.
http://jlne.ws/rbkPrX
Chicago Mayor Stumps For Trading Firms In Swap Market Revamp
By Jacob Bunge and Katy Burne Of DOW JONES NEWSWIRES
Mayor Rahm Emanuel is barnstorming for Chicago trading firms that are vying for new business created by the financial markets law he helped push through the U.S. Congress. Emanuel in late September traveled to Washington, where he discussed the rulemaking under the Dodd-Frank financial law with the head of the Commodity Futures Trading Commission. His message: Don't shackle Chicago's small, trading-focused companies with rules designed to rein in the derivatives desks of large and interconnected dealer banks, according to people present at the meetings.
Finance Sector Says Some MiFID II Proposals Need Modifying
By Vladimir Guevarra Of DOW JONES NEWSWIRES
The European Commission's plan to increase the transparency of financial markets by overhauling regulations was broadly welcomed by industry associations Thursday, but they warned that some proposals needed to be modified to prevent them having an unintended negative impact.
http://jlne.ws/orVVTi
The LIBOR Investigation spreads to EURIBOR
Forbes
For some time now there?s been an investigation into whether LIBOR rates were mis-reported at the time of the financial crash. It looks like this investigation has now spread to EURIBOR: RBS is among the banks to have had its offices raided by European Commission officials as part of the investigation into the suppression of ...
http://jlne.ws/or8Oa1
Banks face penalties in return for bail-outs
By Gerrit Wiesmann in Berlin, Hugh Carnegy in Paris and Alex Barker in Brussels - Financial Times
Distressed European Union banks that tap national governments or the region’s E440bn rescue fund for capital will be subject to state-aid penalties, involving compulsory restructuring or – in the worst case – orderly wind-downs.
http://jlne.ws/rddLdH
Central bankers must update outdated analytical toolkit
By Gillian Tett, Financial Times
Eight years ago, Claudio Borio, a senior economist at the Bank for International Settlements, co-authored a paper which warned that the world’s financial system was spinning out of control, due to excess in the complex credit world. At the time, the paper was largely ignored, if not derided by many senior policymakers. But now it looks prescient; so much so, in fact, that Borio and his co-author, Bill White (who also used to work at the BIS), are some of the few economists who have emerged from the recent financial crisis with their reputations intact.
http://jlne.ws/nKh2zM
Banks pay out guaranteed bonuses despite ban
By Megan Murphy in London - Financial Times
Investment banks are exploiting gaps in global pay reforms to persist with some of their most contentious practices, including guaranteeing lucrative bonuses to employees regardless of their performance, industry data show.
http://jlne.ws/nVeCle
Mifid’s net cast wide to overhaul Europe trading
By Jeremy Grant and Alex Barker, Financial Times
If anyone were in any doubt about how Europe is approaching reform of financial markets after a year in which an alphabet soup of proposals has been floated, EU internal markets commissioner Michel Barnier was clear on Thursday. Speaking as the European Commission published its “Mifid II” proposals, the Frenchman said they were “a complete overhaul of the way financial markets operate in Europe”.
http://jlne.ws/n9Avo1
Struggling French Banks Fought to Avoid Oversight
By DAVID ENRICH And DAVID GAUTHIER-VILLARS, WSJ
PARIS—Two years ago, a French banker flew to Washington on an emergency mission: Persuade International Monetary Fund chief Dominique Strauss-Kahn that his concerns about the health of the European banking sector were unfounded. The trip was a success. Mr. Strauss-Kahn agreed to keep his fears under wraps to avoid causing market panic, according to people familiar with the matter.
http://jlne.ws/nvDJk5
ECB Said to Consider Increasing Loans for Collateral Disclosure
BusinessWeek
The European Central Bank is considering lending more money against asset-backed securities where issuers provide additional information about the loans securing the bonds, said a person familiar with the matter.
http://jlne.ws/nVMoOa
As UBS Shrinks, What of Its Asian Operations?
Wall Street Journal Blogs
As UBS prepares to shrink its investment bank, the key question is what happens to its successful Asian business.
http://jlne.ws/q7wxT9
A New UBS Boss Just Took Over, And Word Is He's Slashing Tons Of Jobs
Business Insider
Less than a month as UBS's interim chief, Sergio Ermotti is planning to slash the size of the investment banking division following the rogue trading scandal that cost the embattled Swiss bank $2.3 billion, the WSJ reported.
http://jlne.ws/nvZulE
Deutsche Bank unit BHF to cut 270 jobs-sources
Reuters Company Finance News via Yahoo! Finance
Deutsche Bank AG (DBKGn.DE: Quote , Profile , Research , Stock Buzz )unit BHF told staff it will shed 270 jobs, two sources close tothe bank said, as the parent company struggles ...
http://jlne.ws/nlO0uq
Capital One Profit Tops Estimates as Fewer Borrowers Default
BusinessWeek
Capital One Financial Corp., the credit-card issuer seeking approval to purchase ING Groep NV's U.S. online bank, said profit advanced 1.3 percent as lending increased and fewer borrowers defaulted.
http://jlne.ws/pFgMxb
Fifth Third Flies: Financial Winner
TheStreet.com
Fifth Third Bancorp was the big winner on a strong Thursday for most U.S. financials, with shares rising over 9% to close at $11.63. The Cincinnati lender beat third-quarter earnings estimates with a profit of 40 cents a share, which was a 14% improvement over the second quarter.
http://jlne.ws/qjpVfa
Mifid II proposals: early reaction
FT Finance News (ext) via Yahoo! Finance
A round-up of the initial reactions from market participants to the publication of the proposals to update the Mifid directive governing European financial markets
http://jlne.ws/nKENdV
October 20, 2011: MIFID II Rollout, In A Nutshell [NEWSLETTER]
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